The Communist Party daily, Granma, said a state agricultural company had partnered with the unnamed firm for three years to cultivate the grain on 3,000 hectares (7,413 acres) in western Pinar del Rio province, hinting the lease and acreage would be extended.

“For the first time, a process of handing over land to a foreign company is being carried out to take charge of its cultivation,” engineer Jorge Feliz Chamizo, who is the deputy director of the Granos de Los Palacios agroindustrial company, was quoted as stating.

Cuba consumes up to 700,000 metric tons of rice annually, most imported from Vietnam.

But the import dependent county’s main staple has been in short supply in recent years due to an economic depression sparked by a lack of convertible currency to import food, fuel, spare parts, raw materials and agricultural inputs.

Local rice production peaked at around 250,000 metric tons of consumable rice in 2018 before the crisis began, and has fallen more than 80 per cent since then, the National Statistics Office has reported.

Granma also reported the venture would be the first to hire labor directly, instead of through a state-run hiring hall.

Many investors complain they are forced to hire labor through the hiring halls in hard currency which then pay their employees in pesos and in general make managing their labor force more difficult.

Foreign investment has declined in recent years due to tougher U.S. sanctions, according to the government, though no statistics are available.

Western diplomats and businesses also report difficulties repatriating profits due to the country’s cash shortage.

Prime Minister Manuel Marrero said in December the government would change the labor practice as part of reforms this year to the foreign investment law.

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The agricultural trade groups stated their views in a letter sent to Trump, who is to be inaugurated on Jan. 20.

“As a broad cross-section of rural America, we urge you not to take steps to reverse progress made in normalizing relations with Cuba, but also solicit your support for the agricultural business sector to expand trade with Cuba,” the letter said.

“It’s time to put the 17 million American jobs associated with agriculture ahead of a few hardline politicians in Washington,” the letter concluded.

Signatories included a wide range of agricultural trade groups, from the American Farm Bureau and American Feed Industry Association to the soy bean, corn, rice, wheat, peas, beans, cattle, poultry lobbies and other associations.

The letter was arranged by the Washington-based Engage Cuba Coalition and USA Rice.

Agricultural organizations in states that Trump won, such as Idaho, Alabama and Georgia, were also signatories.

Trump, a Republican, has said he will dismantle the still fragile detente begun by President Barack Obama two years ago unless Cuba gives the U.S. a better deal, while providing no specifics.

The letter was sent before the White House announced on Thursday that it was ending a policy that granted residency to Cubans who arrived in the U.S. without visas, the latest bid by Obama to make his Cuba policy irreversible.

Trump is expected to review the Cuba engagement upon taking office and has named Jason Greenblatt, a Trump Organization executive and chief legal counsel, as negotiator for sensitive international issues, including Cuba.

Under an exception to the U.S. trade embargo from the year 2000, Cuba may import agricultural products for cash. The letter calls on Trump to allow normal trade financing and credit so the sector can better compete for the Cuban market.

While the sector has sold billions of dollars in products to Cuba over the years, the letter said sales have steadily declined as the embargo makes it difficult to compete with other suppliers. Cuba imports some US$2 billion in food annually.

The signatories cited a deep dip in farm income to bolster their argument that U.S. farmers needed more trade.

“Net farm income is down 46 per cent from just three years ago, constituting the largest three-year drop since the start of the Great Depression,” the letter said.

According to USDA, the U.S. exports over US$300 million in agrifood to Cuba per year, mainly in poultry and soymeal.

Canada, by comparison, often exports upward of C$80 million in agrifood to Cuba each year, mainly in wheat flour and meal, dried peas, durum, milk powder and frozen boneless beef.

— Marc Frank reports for Reuters from Havana.

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President Raul Castro unveiled an ambitious market reform agenda in one of the world’s last Soviet-style command economies after he took office a decade ago, but the reforms moved slowly in the face of resistance from conservatives and bureaucrats.

At the April 16-19 congress, Castro railed against an “obsolete mentality” that was holding back modernization of Cuba’s socialist economy. But he also said the leadership needed to respond quickly to problems like inflation unleashed by greater demand as a result of reforms in other sectors.

In response, delegates voted to eliminate licenses for private wholesale food distribution, according to reports over the past week in the Communist Party daily, Granma, and state television.

Delegates said the state would contract, distribute and regulate prices for 80 to 90 per cent of farm output this year, compared to 51 per cent in 2014, according to debates broadcast in edited form days after the event.

Reuters reported in January that Cuba had begun a similar rollback in some provinces, increasing its role in distribution again and regulating prices. The decision at the congress will extend that program.

Data released in March showed that Cuba’s farm output has barely risen since 2008, when Castro formally took over from his brother Fidel, contributing to a spike in food prices blamed on supply-demand mismatch.

Cuba imports more than 60 per cent of the food it consumes.

The Union of Young Communists’ newspaper, Juventud Rebelde, reported late last year that the price of a basket of the most common foods increased 49 percent between 2010 and early 2015.

There are no government statistics on food inflation.

While hurricanes and drought have played a part in poor farm output, some experts and farmers say Cuba did not go far enough in allowing farmers freer access to seeds and fertilizers to increase production.

Backtracking

But demand is rising fast. Relaxation of restrictions on self-employment has led to a boom in small restaurants, at a time when Cuba’s detente with the West is leading to record numbers of tourists and an emerging consumer class.

According to the reports, there was no discussion at the congress of moving ahead with plans to allow farmers to buy supplies from wholesale outlets, instead of having them assigned by the state.

Nor was there mention of another reform, also adopted five years ago and never implemented, to have co-operatives join forces to perform tasks currently in state hands — for example, ploughing fields.

The state owns nearly 80 per cent of arable land in Cuba, leasing most of it to co-operatives and individual farmers. It has a monopoly on imports and their distribution.

“They never fully carried out the reforms and gave them time to work. They stopped halfway and appear unable to come up with any other solution than backtracking,” said a local agriculture expert, who asked to remain anonymous.

He said farmers often had no equipment and few supplies such as seed.

The government reported leafy and root vegetable output at five million tonnes in 2015, similar to 2008, and unprocessed rice and bean production of 418,000 tonnes and 118,000 tonnes, compared with 436,000 tonnes and 117,000 tonnes eight years ago.

Cuba produced 363,000 tonnes of corn last year, just 3,000 more than when Castro took office.

— Reporting for Reuters by Marc Frank in Havana.

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While Cuba has allowed nearly 500,000 small-business owners and their employees to operate privately and hundreds of thousands of farmers to grow their own crops, it has been slow to give them access to wholesale markets.

Even though the farming sector has been the most liberalized, Cuba continues to import more than 60 per cent of its food, in part because farmers still depend on state-run allocation and distribution of subsidized supplies. Official output has not significantly increased since the reforms began six years ago.

But as of Sunday, farmers on the Isle of Youth, home to 60,000 people off the southwest coast of the main Caribbean island, can purchase unsubsidized supplies on demand.

Since President Raul Castro took over from ailing brother Fidel in 2008, fallow state lands have been leased, and farmers are freer to sell directly to consumers.

The reforms have also gained the attention of business leaders in the U.S., even though U.S. companies are largely banned from trading with Cuba.

A delegation from the U.S. Chamber of Commerce visited Cuba last week, calling for an end to the U.S. trade embargo and urging the government to deepen and accelerate the reforms.

Cuban economist Armando Nova has argued for years that farmers need to be allowed to buy their own supplies and sell on an open market.

“Agriculture is cyclical. You need to close the cycle for reforms to work and now that means the inputs,” Nova said.

Lifelong farmer Ibrain Vibes, 43, who inherited his land in Artemisa province just west of Havana, was skeptical.

“The reforms are one thing and all the regulations are another. It feels like the earth keeps moving under our feet. Nothing works like they say it will,” he said.

Vibes complained a government crackdown on black market fuel was forcing him to buy it at the retail price of $4.50 per gallon. Otherwise he would lose the acres of malanga, a tuber staple of the Cuban diet, he had been cultivating for months.

Another Artemisa farmer, who asked to be identified only as Carlos, looked down the pages of herbicides, pesticides, fertilizers and other products now on sale on the Isle of Youth as he sat in his brand new house, the largest by far in the neighbourhood, a vintage Ford truck with a rebuilt motor outside.

He said that thanks to reforms he was earning more money transporting food for fellow farmers than from his farm, but was at home because he could not find reasonably priced fuel.

“This list looks good, but let’s see what’s really available in three months and what happens when the experiment goes nationwide,” he said. “Besides, they didn’t include the most important agricultural input, diesel fuel.”

— Marc Frank reports for Reuters from Havana, Cuba.

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Already one mill, the first since the industry was nationalized soon after the 1959 revolution, is under foreign management, with at least seven others on the auction block.

AZCUBA, the state-run holding company that replaced the sugar ministry three years ago, announced plans to produce 1.8 million tonnes of raw sugar this season, 18 per cent more than last season’s 1.6 million tonnes.

But the harvest is 20 per cent behind schedule, sugar reporter Juan Varela Perez wrote recently in Granma, the Communist Party daily.

“Continuous and heavy rainfall in almost all provinces of the country has affected the harvest since January,” state-run Radio Rebelde said late last week, reporting on a meeting of AZCUBA executives at the end of February.

“To this has been added the habitual problems of inputs arriving late, disorganization and the poor quality and slowness of repairs,” the report said.

Sugar was once Cuba’s leading export, both before the revolution and afterward, when the former Soviet Union bought Cuban sugar at guaranteed prices. Today it is Cuba’s seventh largest earner of foreign currency, behind services, remittances, tourism, nickel, pharmaceuticals and cigars.

“These days it is a true odyssey to go through a harvest. The mills need more profound repairs, but that costs millions upon millions of dollars,” Manuel Osorio, a mill worker in eastern Granma province, said in a telephone interview on Tuesday.

“So they do some superficial repairs and start grinding and immediately the problems begin and this year to top it off it is hot and raining almost every day. The cane needs cool and dry weather to mature. If not, it is like milling weeds.”

The sugar harvest begins in December with the “winter” season and runs into May, with January through March the key months as dry and cool weather increases yields, but not this year.

“I can’t remember a wetter winter and it is almost impossible to harvest,” sugarcane cutter Arnaldo Hernandez said in a telephone interview from eastern Holguin province.

Cuban sugar plantations lack adequate drainage, making harvesting by machine difficult when it rains, and humid weather retards the production of sugar in cane.

“Going into the plantations is a heroic task, and when the cane reaches the mills it yields little sugar,” Hernandez said. “Look, even the Guaraperas (sugarcane juice) they sell in the city is like water. I know because I tried some myself yesterday.”

Rainfall was twice the average for the month in key eastern and central provinces through most of February, according to official media.

“So far this year 115.2 millimeters (4.5 inches) of rain has fallen in (the eastern province of) Las Tunas, twice the historic average,” the National Information Agency reported in late February. The agency said the harvest in Las Tunas was 35,000 tonnes of raw sugar behind schedule to date toward a plan of 194,000 tonnes through May.

A similar situation was reported in central Villa Clara, where the goal is 218,000 tonnes, and in central Camaguey, which reported production to date was 13 percent, or 11,000 tonnes, below plan.

Investment opening

Cuba produced just 1.2 million tonnes of raw sugar three seasons ago when AZCUBA was formed, compared with eight million tonnes in the early 1990s, before the demise of the Soviet Union led to the industry’s near collapse.

Industry plans call for an annual average increase in output of 15 per cent through 2016, though over the last three harvests the increase has been 12 per cent, according to AZCUBA.

The poor performance so far this year may accelerate AZCUBA’s plans to open the sector to private investment.

President Raul Castro, who assumed power from his ailing brother Fidel Castro in 2008, is trying to revive the country’s economy through reforms passed by the Communist Party in 2011. The plans include more foreign investment.

This year, the Cuban Chamber of Commerce listed seven more sugar mills as candidates for foreign investment, all of which were built after the revolution and are therefore not subject to claims by previous owners.

The remaining 48 mills in the country were all built more than 60 years ago.

This month the Cuban National Assembly is expected to pass a new foreign investment law that makes the island, and agriculture, more investor-friendly.

Odebrecht SA, a Brazilian corporation, began administering a mill in central Cienfuegos province this year, the first foreign company allowed into the industry since 1959.

Odebrecht subsidiary, Compañía de Obras en Infraestructura, plans to upgrade the mill as well as the supporting farm and transport sectors, and has expressed an interest in other mills, as have a number of other foreign companies.

Its 13-year contract calls for an investment of around $140 million to increase output to more than 120,000 tonnes of raw sugar from 40,000 tonnes.

Cuba consumes between 600,000 and 700,000 tonnes of sugar a year and has an agreement to sell China 400,000 tonnes annually, with what remains sold to other countries.

— Marc Frank reports for Reuters from Havana.

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Cuban President Raul Castro announced in December that the National Assembly would adopt the new foreign investment law in March.

But the official state-run media has in recent weeks taken to saying that the law, which has been cloaked in secrecy, would be adopted sometime during the first half of this year, without further explanation.

Foreign Trade and Investment Minister Rodrigo Malmierca told the visiting European education commissioner, Androulla Vassiliou, of the decision to postpone adoption until April during a meeting earlier this week, a member of Vassiliou’s staff said.

The postponement was also confirmed by Western diplomats who requested anonymity.

The ruling Communist Party passed a more than 300-point plan to revamp the economy in 2011, which includes moving 20 per cent of the state labour force to a non-state sector made up of farms, small businesses, co-operatives and joint ventures.

But for two years, Cuban authorities have gone back and forth as to whether a 1990s law would be amended or a new law passed to attract investment, which is at levels well below that of Cuba’s neighbours.

“After many years of delays and apparent internal divisions, it seems that not even Raul has been able to break the deadlock within the top echelons of the Communist Party… where certain revolutionary principles and bureaucratic practices clash with the nation’s desperate need for foreign capital and technology,” said Richard Feinberg, author of a number of studies on Cuban reforms and foreign investment and a nonresident senior fellow of the Brookings Institution.

Under the current foreign investment law, foreign firms pay a 30 per cent profits tax and 20 per cent labour tax, though the labour tax is gradually being reduced.

Cuba’s economy grew 2.7 per cent last year and is expected to slow this year due to a lack of hard currency for imports and capital for investment.

Cuban economists estimate the country needs to expand at a five to seven per cent rate to develop.

— Marc Frank reports for Reuters from Havana.

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